Crypto Advocates Fight IRS Over Privacy Rights

Crypto enthusiasts have taken a significant step in safeguarding the Fourth Amendment privacy rights of cryptocurrency users by filing an amicus brief to support an ongoing legal battle against the U.S. Internal Revenue Service (IRS). The case in question revolves around a 2017 court order that compelled Coinbase, a prominent cryptocurrency exchange, to disclose the data of more than 14,300 of its users, marking a pivotal moment in the ongoing struggle for digital privacy rights.

The DeFi Education Fund (DEF), a cryptocurrency advocacy group, has emerged as a vocal advocate for the preservation of privacy rights in the realm of blockchain technology. They recently submitted an amicus brief to the U.S. Court of Appeals for the First Circuit on October 20th. This legal maneuver is aimed at bolstering James Harper’s appeal against the IRS, as part of an overarching effort to prevent the U.S. government from having unbridled access to users’ transaction histories on cryptocurrency platforms.

The catalyst for this legal battle stems from the actions taken by Coinbase in 2017 when they complied with a court order to surrender user data to the IRS. This incident triggered a groundswell of activism for enhanced digital privacy rights, propelling DEF into the forefront of the fight for Fourth Amendment protections in the digital age.

DEF Urges Fourth Amendment Update for Digital Finance

DEF’s central argument revolves around the need to adapt the Fourth Amendment to the unique challenges posed by blockchain technology and cryptocurrency transactions. They emphasize that when outdated legal precedents confront innovative technologies, it is incumbent upon the courts to ensure the preservation of privacy against government intrusion, as envisaged when the Fourth Amendment was adopted.

The Fourth Amendment of the U.S. Constitution has long served as a bastion of protection against unwarranted government intrusion and arbitrary seizures. DEF contends that this protection should extend to the realm of digital finance, where privacy rights are equally paramount.

In support of their argument, DEF references the landmark case of Carpenter vs. United States, which posits that the Fourth Amendment places limitations on the U.S. government’s ability to acquire data from third-party platforms such as Coinbase. They further expound on the fact that the transparent nature of cryptocurrency transactions on public ledgers makes it feasible to link pseudonymous addresses to real-life identities, a revelation that profoundly affected all 14,355 users involved in the Coinbase case.

DEF underscores that the government’s request for user data reached far beyond mere transaction details, intruding into the realms of familial, political, professional, religious, and even sexual associations. This level of intrusion painted an “encyclopedic” synopsis of the lives of Harper and his fellow 14,354 users, a degree of insight that far surpassed what is obtainable through conventional banking records.

The DeFi Education Fund, with its mission to educate policymakers about the virtues of decentralized finance and advocate for regulatory clarity within the DeFi ecosystem, stands as a powerful advocate for digital privacy rights. The ultimate verdict in the case of Harper vs. Werfel and the Internal Revenue Service is anticipated to set a crucial precedent, defining the boundaries of digital privacy rights and law enforcement measures in the United States. This legal battle has thus become a focal point in the ongoing dialogue about the intersection of privacy rights and evolving technologies in the modern era.